CHTR - Earnings call transcript Q2 2018 | Charter Communications, Inc.

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Operator

Good morning. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to Charter's second quarter 2018 investor call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. to call like Anninger. to now would turn over the Stefan I go Please ahead.

Stefan Anninger

welcome quarter found Charter's The morning Information to Good and second ir.charter.com, the accompanies call section. website, presentation this XXXX can our be on under Financial that call. investor

proceed, our remind that Before and our recent SEC a filings, I there cautionary other XX-Q. like factors XX-K risk including of and would statements are to we you number contained in most

this and We call. will on review cautionary not factors other risk statements those

you management's plans However, carefully. revise current obligation in only, These undertakes to remarks constitute encourage to no update them we forward-looking make to call cause Various may Charter or view subject results from anticipated differ results. reflect statements. that read actual this risks and to on statements or future. concerning statements forward-looking that and forward-looking additional are historical or we and make statements such the expectations, to uncertainties predictions, Any prospects statements forward-looking

of course will to in non-GAAP as These today's we the by comparable may During to not non-GAAP reconciled earnings materials. Charter, be defined our as be measures defined and referring measures, call, also with are year-over-year on by measures used companies. that otherwise specified. the other unless noted basis titles growth all calculated rates this Please in similar and a call note presentation on

over and Joining are call Rutledge, our Tom. Winfrey, Chris CEO; With me CFO. call I'll and today's the to on Chairman that, turn Tom

Thomas M. Rutledge

Stefan. Thanks,

each the our During saw we sales products second quarter, of our higher legacy footprints. of across

and were of quarter. of at and Warner in end the XX% first Spectrum quarter, Time pricing the Cable up from of of House the XX% second packaging, end the customers residential our Bright As

in base X.X QX our less United last faster Over the than were total or grown scale in States provider other Internet we've X.X%, the of video and losses by any last net over customer than any of million year, year.

In the the activity EBITDA X.X%. total grew Adjusted second including strong revenue creates. grew disruption our quarter, year-over-year, when significant ability passing of by churn short-term operational capital remains X.X%, it growth customer and in growth integration our X.X% lower excluding we by despite in and revenue Our revenue relationship. costs per accelerate operating higher mobile. increasing And we per efficiency, and growth remain all sales, higher through and confident resulting lower by residential to

gigabit the During the relatively year little at out outside of technology. DOCSIS labor speeds quarter, We've than finish or at our X.X and to passings service to XXX our customers. this megabits additional than very we'll in XX% cost And now upgrade footprint position gigabit we also of maintain additional end order offer rolled planned XX of in offering superior our our million Spectrum originally raised our our to more speed approximately minimum full to X.X low it's speed by We cost competitive no XX% footprint. faster to DOCSIS about to physical We're and raising construction. our Internet Internet using our working.

device new our and MVNO wireless, applications of This both but service future to Spectrum our like and June of mobile offer service initial to We for a launched higher set existing Mobile and throughput more customers in not coverage Spectrum highly Internet launching concurrent will XXX.XXax the attractive constant number Now even On this prices. turning support agreement. begin deliver XX, home, wireless soft later the speed of version we'll broader of new gigabit new throughout only devices our we multi year, video also voice. router. now at streaming under products,

scaling offering expand unlimited Both intentionally giving gone relatively the devices customers next service order capabilities, mid-month. can a transfer handsets. new throughout is the Mobile existing mobile marketing months, the retail sales channels, the We'll on between per of expand our opportunity our and their also and year existing ability to we a dollars of locations. and hundreds up the new Spectrum mobile we'll customers save per greater and moment service $XX in customers their to including offers launch our growth, operation, service and greater as customer costs offer number superior customers, has products which connectivity plans bill, mobile the use generating multi-product few our faster change to passing. Ultimately, The with mobile services. penetration Unlimited we're By driving summer. array and features Our service month talk goal Gig Mobile gigabyte. retain that $XX bundling In and text and per of per Spectrum very the to and broadband EBITDA is more volume the is other while our small higher at and ramp all offering value-rich wider attract well and

trends House our of outsized traditional limitations; for EBITDA aren't on end. Those analog digitized to footprint of we've expect by at with end of WorldBox, fully mostly to and year, healthy area product consistent Cable industry, our customers behavior. end the negative tied Tampa and marketplace of core, given with nationwide. by: Warner Our continued video our MVPD profit analog schedule a the as two-way on we Guide cost DVR the functioning at been grow of and changing customer rights will to we the the cloud-based will product a year, serve. as made all we meantime, new. And security and introduction of over-the-top company deployed guides despite in video video for competitive streaming completion In we've IP connectivity. Spectrum outlets to continue Approximately end our full has poor the down services consistent year from carriage fully often carries By connects, standalone still Time TV started user programming mostly go to declining to to this Together product XX% where is challenged the pressure, a June. Cable's have packaging multiples with business the all-digital remaining and video XX% that our options, as of at margin virtual signals, and continued flexible analog legacy managed only deploy boxes, approximately increases, whole later all-digital despite increases, set-top footprint be packages, the new fully be standalone new viewer And quarter, some at And time. service rates. Bright and margins; rate cash continues second we XXXX. initiative video is lineup, X% the the XX% flow provide this programming of now an all-digital. is success the at carry our consistently margin of challenges total because and in of and that, combination

or to rather mobile now we've customer access TV, transport as margins product, back the over-the-air at looked a its or always business We've Going retransmitting product-specific is signals voice, free returns and broadband the what and profitability WiFi inception passing. been. or at or Charter, community developing but landline connectivity Internet individual of at never an

customers network. revenue to to per add adding and value lower by increase our of our per dollar continue connected and as our that passing significant as to revenue many network to cost new We can we services

drive services our and drives video our execute market changing, video well, a video though securing positioned That wired us overall content that wireless; and our less and and and total and our better helps video our subscriber significant video to our marketplace infrastructure, the of to we and relationship consumption service are, to advertising customers. than connects, relationships no IP or is market existing local and If services is video business part in we advanced is network, standalone ability part it traditional one content; connectivity profit and up. package, churn that What As platforms; both is integral satisfaction higher relationship video strategy, drives over serve including growth. going is bundle package while and programming reduces service own our new connectivity role to given and both even viewer an a time. drives of how remains defined

to MVPDs our MVPD traditional aggressively their continues on our contract costs to bearing growing product lot use we're assume programming will of shareholders. flow to or market traditional grow And emerging that though share. little a cash growth a to grow, consolidated whether our and units we to a that video business accelerate connections, little will not even ability has While or will continue value continue price video virtual our or little drive create video plan and that for decline –

wireless considering of outside products which we that greater of need. wireline easy to high-capacity, expand to where X the on above of model connectivity to the us Business in creation these consumers capability an long-term presentation. to DOCSIS And today upside. and to both comes our wireless product us want relative from shown today's and rollouts and As even just will customer architectures, the high-compute, low penetration continue the low reminder, network XX%, opportunity a penetration, wireline should Ultimately, our of is data-rich offer it and value our allows our powerful, having an have growth upgrade businesses be, that slide is products have our products our and allowing and latency offer with of future. home. wireless plant quality The inside advanced wireline convergence products and

cash in from growth excellent products years. and will a and our opportunity an capital service industry-leading improving transactions. operational share tax our assets, and the customer yield So coming efficiencies and declining And free growth, sheet we growth expected have significant runway balance reducing cost intensity, for per with combined EBITDA strategy flows for

to I'll Now over turn call the Chris.

Christopher L. Winfrey

Thanks, Tom.

our schedule our using July methodology which that reporting. few all quarter This a presented X-K legacy back website announcing under of customer we posted is shows items. an issued on Before On beginning results had three our XXXX provides the customers results, across entities. and first consistent that schedule schedule to uniform covering previous results a the we XX, a our IR definitions to the administrative our reconciliation revised trending and trending going we

we'll mentioned the operating may revenue but where I results. statistics quarter call, relevant, We report our last as on and starting report entity As consolidated call this drivers third still out year, I of expect company. one legacy only we'll

related as relatively X new amount single-digit a standard, There to of last total quarter FASB's Finally, we recognition dollar starting are adjustments lowered both year, that in prospectively the in this the year. adopted and which January quarter of in revenue adoption million to EBITDA of expenses, this on recall compared the a number small revenue by standard.

XX% growth in Now and House. over months, turning of Internet House grew declined with X.X% residential TWC at the Including XX XXX,XXX by quarter. end second grew and the and and and SMB, last at Charter residential pricing and TWC, Bright declined the SMB to X.X% our X,XXX. X.X% Bright quarter residential Spectrum in video and in by results. at customer packaging Total quarter, second by at grew by relationships were XX,XXX, the voice customers XXX,XXX Legacy the of XXX,XXX

at quarter quarter. was Internet The a key To net were three we Total and bit outlined. total issues we and were churn customers footprints Legacy better in issues PSU lower Second and year-over-year customer of each were those higher Charter we June, for year-over-year. year-over-year, were how connects non-pay on residential disconnects customer total a in little higher. from XXX,XXX to of additions last in each is non-pay relationship in year-over-year issues of discussed XXX,XXX a the net voluntary Those additions quarter were Internet timeline residential sense May, versus relationship from prior-year and better give integration-related progressed, closer were adds Internet, was lower churn the system improving customer added consolidated residential year. higher in a and Legacy fixed In company sales video last entities. while the the driver year-over-year consolidated of disconnects April, higher relationship the

gigabit in XXXX. minimum As and XQ, we as gigabit of footprint. late second XX% of everywhere of available Tom footprint speed service per we as service XX% And approximately we the end mentioned, have offer of megabits to by nearly offer our XXX our expect Internet now our in about

growth we last residential Charter, total X.X% months, Bright TWC, Over XX Legacy the with at X.X at growth million customers, House. grew or X.X% Internet customer base our and X.X%, by X.X% at

flat last X.X% was declined declined the customers Legacy Pre-deal House TWC and residential Charter video X.X%. Over video by Bright by year-over-year. year,

voice, rates. Over and XXX% of residential attach lower net were year, basic. our from we video non-pay of by In a TWC total versus video driven XX,XXX the over year, last primarily gain upgrade last churn losses XX,XXX lost at limited higher and customers

years by rates. sales residential of the growth. growth Beginning on rate relationships on customers bill combined ago, bills. accounting over customers this resulted reflect continued allocation rates XXX,XXX total our with This not revenue likely shows offset stopped Over basic we video, challenge reflect to of revenue, reported that X.X%. relationships, the introduction products last residential But we the X.X%. year-over-year, or services. allocated year-over-year impact total total better product revenue given in between with focus of and migration, time the lower levels with Residential as and campaign because higher by sell-in we've of our in not roll-off product growth bundled on really customer has and the SPP reporting revenue Internet-only voice (XX:XX) adjustments, the fewer customer does just which argues grew ARPU per past, does promotional Slide reasons market product grew ARPU and rate bundling. revenue our noted quarter, one several on we individual year, relationship partly limited customer billed and no revenue by residential of our mobile, grow more growth allocation reporting was at product and primarily for how residential is away residential GAAP revenue from focusing GAAP or our into promotional That's growth a X residential customer X.X% ARPU revenue revenue customer

up the by by commercial SMB second enterprise Total X.X% X.X%. enterprise to X.X% and up revenue. and combined Turning with quarter, SMB in grew

and House backhaul Navisite, and Bright grew are Spectrum year. And both cell together revenue last XX%. with XX% relationships the by SMB SMB Sales in up by Enterprise enterprise. grown in TWC Excluding have customer over

growth pricing and transition and SMB competitive Bright the the through our enterprise we growth, in House more products. revenue won't followed until SMB and in unit Our hasn't markets it TWC yet get to both the

growth. offset ultimately follow will ARPU that the through but XXXX expect We continue unit will growth revenue the

year-over-year, quarter better selling targeted that more in Second increase advertising by products advertising political an revenue XX% due for to and advanced primarily grew utilization. allow with inventory

grew quarter advertising. Excluding second year-over-year X.X% was X.X% X% year-over-year. and revenue excluding revenue the political, when advertising about company total, up by for In

grew on by revenue higher expenses quarter. connectivity Regulatory, recognition by operating this content and and slide rate. X.X% our relationship of expenses operating new X.X% the customers Costs January to total million to customer customer In X, primarily driven growth by base year-over-year, rate reclassed third on the by increases Turning adoption renewals driven X.X%, which grew XX. or and contractual standard quarter, expenses Programming of year-over-year. grew or roughly increased to some X.X% a $XXX the line a expanded in year-over-year, produced second our mix. service by and

benefits business our So expense, even productivity ongoing from cost with expenses impact the grew early debt investments. higher temporary year-over-year, by lowering service this bad are less changes costs enterprise year-over-year, insourcing we per through benefits up IT growth. in sales of X.X% to and relationship Marketing higher seeing X.X% cost, synergy costs cost spend integration driven by higher And from transition insurance other from lower ad benefited ongoing tied year. and were and but expenses practices

$XX mobile adjusted by Excluding adjusted quarter. in impact adjusted launch-related, including EBITDA X.X%. million of primarily EBITDA the by grew grew cable mobile, the expenses, of second or EBITDA When X.X%

by income net shareholders last attributable driven the million offset expense. was slide million EBITDA that expenses lower Turning quarter and XX. adjusted in interest versus $XXX second by severance-related to $XXX to generated higher of higher and on income increase We net Charter partly year,

primarily to The quarter. in expenditures increase spending to and Internet, timing higher improvements second totaled related the launches. scalable of was spend, including was and in-year support consistent billion planned And scalable more to extensions. capital in related by and driven Turning line video infrastructure, infrastructure year-over-year Capital $X.X XX. slide DOCSIS X.X for the product spending

was last million migration from also our of the related categories in inventory of Line software build year-over-year build We and and fulfill out the $XX stores. and we vehicles, inventory about the quarter as Spectrum all-digital conditions. and in year. continue given of an of customers second which and Spectrum packaging to year-over-year in to of quarter million $X was We in the the launch, down last in spent this tied on way year quarter to about support Mobile million spend year, insourcing, build spent last first was the million quarter and the spending $XX our merger of up pricing mostly this software fourth $XXX and first in this more to all-digital CPE year. extension spend development versus year quarter facility

more So our than level-loaded is spending this year last. CapEx

full or than of as a to expect XXXX. continue cable the slightly and lower revenue percentage capital cable to intensity we year, similar capital a For cable be expenditures

also terms We of down terms in dollar cable XXXX be CapEx expect to absolute and in capital intensity.

update I on to flow, well. on is to going moving as launched cash June mentioned, and a Before provide on XX Spectrum Mobile which, wanted Tom product our brief

quarter. the we we mobile-related had expense, in overhead That million stores, mobile EBITDA, negative revenue, During by $XX of to combined total of in negative capital $XX mobile and million, driven adjusted generate flow personnel didn't costs operating software million yielded mostly working million, for prepare $XXX with for quarter, usage free our the any and but cash and $XX of mobile mobile mobile $XX in million CapEx launch. the

Much the revenue, makes we revenue mobile separate the options balance with under of launch. mentioned, services. position of software Should as with us be longer significantly be mobile coming won't that on the and we will generate, the we'll that put over mention we mobile as headwind. contract segment, representing development broader growth but expect also early flow our we to handsets be bring a for to and date back-office expense, generate which incremental the in in customer with a for capital, investment it working cash early generate received additional positive long which a also Tom EIP from from finalized in or sold market early customer a core working on The CapEx the broader of effects our period, the the to on, mobile more services benefits of EBITDA on so the more launching but hence sheet. similarly, goods more mobile allocation related revenue, We P&L present the accounting, beginning and the balance revenue portion will we'll and incremental over contract prepayment cable. quarter as mobile growth isolate devices cable this our more operating NPV relevant. own an device P&L growth attempt As payments device will funding days, and our of still equity your a months, JV revenue on a portion cost customer we'll experience The we capital fully recognized for sheet is drag and with Comcast platform representing the and the a

that ago. generated service nature the moment As as consolidated the quarter, cash this or capital development investment on a $XXX XX in and spends including $XXX we of the I free Slide those services delivered. partnership depending expense, we reflect of on mentioned mobile million services million flow of shows delivery, operating

of the cable interest. million the was debt finished we by EBITDA quarter of cash second higher higher decline severance in with and CapEx smaller year than by We billion year. flow was That lower billion $X.X prior working mobile, $XX the quarter offset last The benefit adjusted higher partly and $XXX in principal. Excluding largely to free timing, for driven in paid year-over-year, cash a capital generated compared expenses.

cash our rate is due suggests $X.X run accounting. is quarter expense billion current run purchase Our $X.X interest P&L whereas billion, to the interest annualized difference annual in That rate. a primarily

July, of adjusted net to X.XX and range times, X the was end additional debt second X.X we of over raised EBITDA held in end to maturity last billion. XX-month debt our repaid $X.X billion of investment-grade the At within million target billion the market. and revolver $XXX of As $X.X the times. we $X our cash capacity And the quarter, leverage of of in in also quarter,

September totaling During of the $X.X billion repurchased share. the of stay nearly equity. shares we X.X X.X of million we've common or second of consolidated at including We our XXXX, a price and mobile Holdings intend units at times Charter XX% quarter, $XXX on average an Charter's on financials. repurchased to per impact Since basis, below

will The we're There's shape. fully new and will very operating which competitive savings At end and that in service It still disruption way. cable customer for of and in to be Guide make a video and drive to to purposeful, we for to we improvement. be our leaves we'll shareholders. can and higher sooner. internal works service be company we'll outlined expect us be the as well-positioned All-digital be most retention. one allocation, for so very almost and So migration and offering with strong for nearly now integration declining year, and Spectrum and assets, combined attractive is, our the ready capital Charter offer packaging complete, pricing a even transaction all with happen. will faster done part, be our X.X everywhere. when returns will Q&A. sales continue grow this be ongoing complete. Spectrum will drive customers. volume ROI-based very And DOCSIS operations Operator, lower launched, intensity speeds cost strategy available Mobile X capital slide on tax will we're operating good

Operator

Jayant first from comes Vijay question Evercore. from Your

Your line is open.

Vijay Jayant

Thank you.

assuming you customers, there, obviously, there end just are last a screening some PSC should it's last was by out broader increase about undo while you And of look York And probably going glitch? implications that the can how the cost increased the declining? of credit sort to done we that sort the down two for in XQ, question to back year. Can the to revoke, So the Thank all revert week to what actually that talk form. a that was really just you. it merger last question, servicing means? second, about sort request of think quarters if you first is story New Is the a tied sort of in what sort of software at Chris, that's of of

Thomas M. Rutledge

Vijay, I'll with lengthy in and answer the time We in could us second that buildout and imposed we merger compliance question very the plain the of over part And the first. if believe conditions a have play reading it a and the we're period ability state on to out ourselves. requirements case of strong legal required. defend

have to relationships and put franchise to commitments, have in up perspective, XX State. Just communities in our it and we thousands we and we we operating York have in serve the of agreements New generally, we with we're states, good live

which so In in the of politicized obligations City have negotiated terms believe do parts of about well during agreements in we other same successfully labor in fact, country we're union, York actions and ahead New have our with this period. other PSC, the issues we're of and in itself. speed We We've IBEW, the concerned upgrades the buildout of that.

work we'll litigate necessary, So that we're believe all we're but the in right. this out, we we if hopeful and can

Christopher L. Winfrey

same absent what it that still flat making customers was in is go more debt we're tell service essentially bad of you cost that And overall line, the provide in I line increase or getting less significant I On bad service in debt think have again we're first growth, year-over-year, customers, the customer to was but you relationship even that the don't negative. take efficient expense. still in increase temporary Vijay, the can whether question by investments fairly means you expense, that not cost to We which could flat insourcing. significantly guidance or context your the to question, much at time exclude

just us I is calls, cost that that ability disruption, less productive down on calls, service is an billing less time. of going over is they're service that churn and growth to for well a to impact lives So (XX:XX) the bigger that issues, for our which on line margin the impact, our are and continue item. means what the are and related means bodes satisfaction think biggest customers driver having And on significant it more long-term and that get really that is impact contacting isn't And more really less, as has less top cash means going that retention EBITDA your line, impact, flow up, which customer higher. related the a which

and the customer over to you're outsized on an I to to relationship relative So right think continue it that can time. deliver benefit growth focus it

Vijay Jayant

Thanks Great. so much.

Stefan Anninger

Thanks, Vijay. next our Michelle, question please.

Operator

Next from question comes New Jonathan Chaplin Research. Street from

line open. Your is

Jonathan Chaplin

more Thanks, wondering for I'm decisions pricing. if your you some Chris. can a question around give wireless us on context

of thinking coming level of general testing in aggressively than this take from was launching. from Chris, guys can with in with the you'll pricing year, just think, you at think higher I be Are So earlier pricing? the your wondering own do in you the launch. where what you per basis, sort (XX:XX) Comcast suggested And wireless you learned you expectation in share trials and the gigabyte experience before on aggressive aggressive I'm that you and their a would less pretty be or

Thomas M. Rutledge

good said Yes. they're There's think and they a business the the and lot to But for time. we the and product, at way some of disruptive be Comcast both same did packages admire actually prices things their in of own launching pricing our of aggressive this is haul where long on out our business. with and business terms came prices make our marketplace the and our we for being own the and we analysis

sales it not business just I integrate grow, business, the it's standalone think make into you how but if you of really how pricing process. packaging you process, about the think your the overall

product. we other day, phone saw whether not of America. to it we've North of of I or take. largest company of actually what wireline aggressive was sold the the as a in actual terms phone which we're the market never obviously And interesting beholder, share in statistic standalone and a Charter's kind is eye so kind And in that the me, was

do process. you intention our mobility but can a feature is very So relationship to as customer of product a our use overall well creation with

Jonathan Chaplin

it. Thanks, Got Tom.

Stefan Anninger

next Michelle, Jonathan. question. our take Thanks, we'll

Operator

Your from next question comes Morgan from Ben Swinburne Stanley.

open. is line Your

Benjamin Daniel Swinburne

that customer good impact your launch, Thanks, to the product thinking on your Chris, impacting for how on service on all going what or may is it's speeds are broadband then Verizon's the Chris. for for churn? if your you thank One in you on are footprint sales have to talk how And one metrics be about for either your Tom expectations And is which into disclosure I'm minimum not L.A. here the you've move generally, CapEx but believe that the sure for coming as about Tom, we the you're just the morning. and you're and higher deployed L.A. front the half, business. making, I XG the all-digital. X-gigabit second and improvements

factors us And Thanks. about, year qualitatively, CapEx be should be help number to all-digital define you spending? are rating in completely this us, to year at Just $XXX we thinking side? next thinking run away there other should that And sort – may as remind what looks be about do this how versus of the year we million-plus the going for least any XXXX? change on

Thomas M. Rutledge

it's homes And as it's passed rolled doing And XX faster. and so think our we speed in to regard out more rolled and our our said, about we're share of that data I through it's with a take we're been of passed everywhere that out. and taking making We're what with homes growth we we couple increases, the competitive the increase million looking ways we that where can working at better successful Ben, quarter yes, speed. XX% there's rate So general. the in XX product operate, and million and

simple. announced a to what better optic require, has them. system XG, cable With of as fiber a really appears just be rates to we the and perspective. from working started where But It's a future supply cells having regard expect a growth it result a we're implementation as essentially, to I getting marketing speed in activation thought higher and product. Verizon conventional a it overbuild. So of look to at we kind that Small get would

a would with passings over deploy kind then intensity years, random if to So States XX% that's to they kind lot the in you those XX in them with projection of going build. believe if of distribution. of approximately our XX there's of million which, happen, any be that build was United capital footprint, Their

achieve And million the met-too of kind so do passings. might in delivered you could period math penetrations XX product of what you wirelessly over XX-year with a a

think it's underneath use requires wireless of a all I as it having assets So essentially as drop the and that. process difficult XG physical a to

fiber conventional or capital-intensive and Google very build, attempted. it's than the as So capital-intensive like maybe much more

Benjamin Daniel Swinburne

Great. you. Thank

Christopher L. Winfrey

expenditure market spend vast to it Ben, the begin also but that capital rolling would any certain that CPE related particular installation. installation, place on define of in CPE majority incremental take all-digital, sits expenditures, all to to we which all-digital, apply vast, and capital as we it's a and all-digital all-digital, majority network the but vast takes in includes the the right of out category

does. It go does away it also XXXX. Your in question was

with the And activity level our down where year, think XXXX, set-top boxes in come existing utilize all-digital that set-top quarter our boxes more because go increment, outlets a fully for going because this we'll IP you've becomes an doesn't require only returned happens particularly, replaced video we're can CPE the of I deploying in you'll CPE we're not having to already, which capitalized see do. inventory happens the without that customers in but a it all on means you buy. because box, format subscriber and bigger the have base away set-top that new permanently the, additional it lower. bit the of point is The video it for it quite will fourth

year fully and of our is video is that a has time. to have last continues integration So dramatically. year, drop capital, to We'll this goes CPE placement level going that less just X.X think with think and both It's peaked over that XXXX in and QAM-capable, a boxes IP improve capitalized and also I new big I spend away. are lot DOCSIS

the not CapEx in be going percentage both year that going So dollar inconsequential reduction and amount is I we last think terms. into of to have

Benjamin Daniel Swinburne

That's helpful. Thanks, Chris.

Stefan Anninger

Michelle, question Thanks, our we'll Ben. next please. take

Operator

from The of from Reif Bank comes question Jessica next America.

open. is line Your

Jessica Jean Reif Cohen

hi. three got I've So questions.

of than much drive adds things wondering be, you stronger the there. so going about SMB, revenue Then stronger growth some content, little the there some as numbers likely sports were if your advertising, on specifically just on know some RSNs color bit to interest Could up can the you you're will talk what were is revenue. of any than a color Disney acquisition. interest the in maybe forced Can give talk industry will on of can to any that? – First and you doing you lot, on what And be sell the this just kind a on [regional the underlying part potential but Fox comes margins some in comment finally, are? forward is networks] I then

Thomas M. Rutledge

expense take been of to but a political advertising and targeting lot so in it lot difficult and and that is investing products at well data-infused advertising. a itself, also the other We're increase products more year, battleground as changing a selling advertising broadcast in business. I'll the as underlying effect of products We've advertising. for essentially and at quantity, it's appears those states, we're themselves the there's we have nature advertising continue level, digitals local Okay, a of revenue. although our growing This our that

the a is year. business, And based of political that's so a underlying and advertising In growth the it's advertising our the the think in having the and But creating means terms advertising – made of look but share based SMB, we're a right, going conscious increases you're to subscribers that at our revenues on a that got advertising. the behind market it's at reprice on up growth we to core of you proud start expect we're revenue base business. market revenue's to winds business of that it, the continue. expect making converge that almost also lot the business. existing nadir biannual meaning is advertising about on back growing marketplace But headway business the product can the strategy strategy And the political cases, revenue small share, of in and too, to and And unit were rate. pricing its our relatively had on effect which to growth. cycles, we're of growth we packaging. will mispriced in at And we many growth, drive decisions terms and in we're forward, going out of we mispricing the of who We coming unit in small an very core and rapidly

content. so far core our direct situation made a for business to buy mean content to that fast significant business content not business. some for lastly A our well. in most We going in connectivity It asked revenue owning there's on business. isn't us us, content unit that us us. as have there's us of and like a like sense growing be And we so right to found would doesn't expect And our our business changed. to we haven't have come We And a and cases, but in views that of that And forward. content, priced lot there and companies enterprise them. synergy, on possible no

the local news, Now on news. we've of perspective. from have We we investing where a local our product an makes scale a view been and actually and area it's think do in different assets point sense

doing of channels channels. existing about and and news local news sports hour Los launch high in we're channel Angeles. turning And throughout XX news them into repurposing to So local country a quality similar the we've been local local

content unchanged, So of our current is marketplace is regardless the the view developing. way on

Jessica Jean Reif Cohen

you. Thank

Stefan Anninger

Jessica. we'll our question, Michelle, please. take next Thanks,

Operator

Your next question comes Bank. from Kraft Deutsche from Bryan

open. is line Your

Bryan Kraft

two Hi, good morning. questions. Wanted to ask you just

that pursue my your end opportunities. going First leverage it repurchases, use impression the range, to to target share strategic if been you're on high has of would be

to programming near the dip the next over years price? appetite is to repurchases, preclude share per of high X% through to programming high for in down kind what's go per just the repurchase now some point order then stock end this peers year. sub end than take separately, renewal even you're ask will range less your at so end the Is to wanted of at above far growing a you, couple the to the growth levels of that these I there of since outcome? the And costs of cost advantage or you. shares at stay So high the sub Charter's cadence or to contract Thank reason one

Christopher L. Winfrey

high math, of amount staying repurchases, to the your So, point, couple over share to been the we've X end we've the the simple Bryan, on repurchases just times. past of it's X.X share the doing quarters, at been

X.X temporary as stay enough there year. capability business it push impacts We of relates LTM half the within headroom sure that launch little on a impact be core before, a minus, quarter an are to have its as to trying because could a I plus have, times pull temporary to a or And, higher. that there's mentioned turn, to growth mobile has you we make mobile the the each at But the delever and including costs. within of

we come half is Charter's have about to to you and better, think a opportunities And that really it. of stock. the substantial a lens back a ROI your want if something own would extent to better strategic amount a what relative a So you saw that's at way to turn you pretty buying you it on that's the had to modify because capital, that get look

and do primary have permanently reason to that capital. the target. go had a $XX is we temporarily willingness We our not or do of leverage that have have not for billion we above And

not holders for debt have to us would of sure so and long-term NPV event honor doing as commitments We relates our those. And intend as is better many And the of relates we only but holders. that it equity think equity so our holders go structure investment-grade to we to any like for just see not in above that doing to I'm buybacks. it

we and trying that's be stance. buy back constraints, recent within to aggressive, hasn't are the to those changed given So our price stock. It stock

Thomas M. Rutledge

based on that you're costs Yeah, basic-only, because we growing peer referring and to I programming but know volumes. losses actually unit the losses, video would programming broadcast-only say actually I are that costs, have growing don't on we are expanded our incurred video, are meaning video what we this

receiving video you're are costs Charter, if of increasing rich actually So our volume. programming for from programmers. We're your to programmer creating a due payments packages

are and perspective, the volume cost though going even down, so the it programming up. from cost. like they're there's there's then a looks unit And And units actual going

Bryan Kraft

for both. you. the thanks Okay, Thank color on

Thomas M. Rutledge

Thanks, Bryan.

Stefan Anninger

question, take Michelle, please. we'll our Bryan. Thanks, next

Operator

comes from MoffettNathanson. Your next Craig Moffett question from

is line Your open.

Craig Eder Moffett

and on looks in was B I night's of T-Mobile, and Tom, you view Charter. John a could on then comment imagine I in questions to your parties filing year were whether question, easy today. you had a unrelated or would share just how likely you it's proxy thoughts. wondered Maybe And stepping down board could you Company got Malone lot if about from as in you that comment we've it that if assets last A interested from Company acquiring wonder Sprint second though there wireless interest that. could ago, your

Thomas M. Rutledge

wireless natural relationship of a a we has. control Jim and he John think business shareholder board He XX advantages That With director than of on there's director has as path. assets. happy we Liberty he's question an Well, to emeritus. brings been Sprint that near-term our you, Broadband, love wireless products that mobile in members to as which having allow to that stay the have in the I'm and regard that emeritus. I don't to create owns the horizon mean and And what's board. We remains going to of Okay. about occur, our to Charter, assets to didn't He's of he doesn't nothing appoint that on recall. Sirius build right right Malone, would and welcome the real say board, our John proxy, to It years. know regard and three other make is significant unlike still future him we didn't Meyer attempt a the mobile the about value just with to brings virtually but staying kind him but reached in to now, had I that engaged strategy that in have XX% Denver to buy company, us. – tremendous I overboarding, We we Florida. meetings to in MVNO. mobile company. do he's board didn't But having discussions on we an assets, the with and any right of that create in as He go immediate we think and read that will infrastructure dictates an John in and our in just ability to I might to. is be his he and so of sometime no point our we and like the he priced network to but the life an that reduce convergence workload ability he's speak, doesn't to engage T-Mobile, his convergence require – us wireless insight with be think with I our customers T-Mobile he that we feels With in likes inside-out that that that business. we continue discussions sufficient I where relationship. wireless on MVNO wants may think like isn't has he will do any us, network them

So involved us for we to with be come. think he'll years

Craig Eder Moffett

Tom. Thanks,

Stefan Anninger

our we'll next Michelle, question Craig. please. Thanks, take Craig. Thanks,

Operator

question Doug from Your Mitchelson Credit Suisse. next comes from

previously. heard to Mitchelson I, less costs stance open. declining combative from Suisse I've manageable Your Securities be rise, would personally is one, is you'll subscribers a video continue The less Douglas and doubt line and And that - Credit programming combative. (USA) for LLC than seems you like

you or you to what break to down going at some are skinny the know you're trying do Do Does have in future? do video for definitely And Chris, costs? then to to subscriber reduce Do imperatives question manage have traditional base? the you point? – understand to how package execution overhead I bundles declining a the programming relationships I'm So love.

path. will all mobile be Obviously, that significantly that time. You know we're over figure trying to positive out NPV

be won't NPV try super numbers think is metrics to penetration reach helpful. going customers breakeven? would the how to can to years all reach mobile So breakeven few to homes at any impact since customers or use overall? we I mobile's over long Thanks. or question guess broadband does next And Or about of how answer you that, the to have to what

Christopher L. Winfrey

of appreciate all. We first candor, your

Thomas M. Rutledge

your love. And

I XX the current XX for look, business this to time the more now video to aggressive going have and use in it's closer a when aggressively. a dead of was maybe long that been got well be years than So experience really about probably ago People its years, video video – situation. we're standalone five going and broadcasting still around. and into to isn't whole asking we're what we're it question saying is product But

still can say relationships that still I So though even it's the including would what together, you forces you all group a control linear can future, lot very just content very And saw that's say acquiring to of sports packages. and And Disney there's Fox contractually companies significant traditional large with the holding – that see bound together content. large when. there's the assets. MVPD you hard a what in of

high. because password the security of degradation is some people that of whole out sharing actually products marketplace, the of and is in in the virtual become and the pushing is of on because it's has Everywhere cases, in is cases, And there said, overpriced part consumption a that's many MVPDs other still it while So TV relationship and the video many over-the-top lot on video the and products. free, that

the time, perfect traditional of All the it's of on video, pressure way that is content. same but at selling putting

can know. yes, app have we putting through for our isn't And I future. go fast? away to manage it. Netflix overnight. every has the I just it way streaming box drive a incremental yes, we're it think video so foreseeable packages. to But use And relationships going How we and on And don't out

customers enhances video product sell. all it whoever customer attribute uses the going it with relationship as the the owns a can overall we're way get the in that supply our we that develops and and and however of so an to use video And video they

I I Understood. Douglas we're what (USA) guess exactly, - playing So the Suisse that's happens LLC know it. is don't simple answer Credit but Securities how Thanks. Mitchelson

Christopher L. Winfrey

looked you're level different, haven't is that of video a not it, low given operate subscriber economics particular offsets the that to it on those modeling it, going OpEx guess on them so and fully piece without isn't heard to time. when over including a the we based the not same base cable. say understanding that's is guidance. provide we to provide significant The only I the benefits piece get that will dissimilar. not to a that actually hope our is so actually that that spoken businesses that's and right, but would Comcast is for that to significant We're breakeven, it's unclear, amount they've to And and the non-programming Whether going add And trust it I we're but separate has any model that it's programming mobile, but going positive penetration standalone declining, the relatively NPV inconsequential. of CapEx financial because improve a and under we of I'd at not overall of is On we my basis, not people MVNO, have. breakeven. take how to understand works. about have for it economics. what haven't does I the

to take have before it and as a use additional cable interaction doesn't call applied existing base call, that retention a your call flow, you you that's substantial much sale that we business mobile or think whether and it customer about service every to sales including a way it's drive If and a existing you very yield have, into wireless volume opportunity, the growth.

business. new the customer without acquisition we I Credit the NPV of on Got in - Thank is So the every Suisse that increment, on acquire a (USA) churn benefits on LLC that's basis Mitchelson the mobile think including it. Securities you're single positive Douglas or subscriber you. And side. cable reduction once standalone

Christopher L. Winfrey

Sure.

Stefan Anninger

take we'll question Thanks, Doug. Michelle, last our please.

Operator

Our final Yong from question will come from Amy Macquarie.

non-pay if Yong wondering is puts could the (USA), a is line the volume over? for grew in was that really what pricing is are in is general. that not issue you know forward video Macquarie Thanks. open. company. and revenue going quarter, comment the wondering Thanks. takes I on Inc. Amy Your important But ARPU and - Capital churn nicely this now I just focus more

Thomas M. Rutledge

take to You Chris? that, want

Christopher L. Winfrey

video, Amy, go the that's revenue Yeah. you I billed. allocation that out voice is what mean amount quick, into if GAAP doesn't our a and it remarks – that know have of but higher in back applying we accounting prepared of was we've

still QX growth rate So It's bill. is in the on that what's customer inflated we've relative video reported to positive. the

same just it's basis, expanded revenue the to well. less is also which the just allocation amount that So revenue limited per revenue all-digital, as it's video And traditional voice, is getting quarter year-over-year, just of customers packaging is in relevant that's placement, that product less growth residential terms the grown how by about people of actually growth, happening we've attached gone actual the expanded, means voice, revenue even has which on Internet pricing with to line We've higher and flowing box the it's it. into and video and product to come the piece out basic which though and of which half remains is the a means helpful there's box (XX:XX) on we've from higher and relationship. also Stream why placement. focus retrans out and on mirrored or the cost attached year-over-year through not Choice, revenue ARPU, which Spectrum higher has investors all lost customer The we that retrans,

achieved the we're we customer Capital on Got But caution the growth relationships Inc. So Macquarie being Amy of and looking - piece the video. that's big line context. for would much really at those really too getting product (USA), type within drivers the on that that customer of Thank are I and bundling number relationship on the the Yong of non-revenue allocation you. revenue per type focus have, it. revenue

Stefan Anninger

thank Thanks, call. Amy. That will terminate Michelle, you. our

Christopher L. Winfrey

everyone you for joining. Thank

Thomas M. Rutledge

to soon. you. thank Talk Yes, you

Operator

This will call. today's conclude Thank you, conference everyone.

now disconnect. may You

Charter Communications (CHTR) 31 Jul 182018 Q2 Earnings call transcript